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SpaceX AI revenue more than tripled
The quarter
Revenue also rose 67% from the first quarter. The AI segment, which rents compute to Anthropic and Google from the Colossus servers, grew to $2.6 billion from the prior quarter's level, more than tripled. That figure does not include Cursor, whose purchase has not closed. Capital spending was $18.4 billion in the quarter, six times the year before.
Segment by segment
Starlink's connectivity segment brought in $4.3 billion in revenue and $2.6 billion in adjusted EBITDA. It has 12 million subscribers, double last year, paying $66 a month on average. The space segment ran at about negative $200 million in adjusted EBITDA, and the AI segment at positive $1.1 billion.
Targets and stock reaction
SpaceX expects its compute to grow from 1.4 gigawatts to about 2 gigawatts by the end of the year. It guided to $100 billion in annualized revenue by year end and moved its target of $1 trillion in annualized revenue up a year, from 2031 to 2030.
Shares dropped 13% after the report. The stock is down 30% since going public in June and has settled at a valuation of about $1.4 trillion, against an IPO valuation above $2 trillion.
How does Starlink earn money from subscribers?
Customers buy or lease a terminal and then pay a monthly fee for service. The company also sells higher-priced plans to businesses, ships, aircraft, and governments. Because the satellites are already in orbit, each extra subscriber adds little cost, which lifts profit margins as the base grows. Starlink opened its first public beta in late 2020.
Why do AI labs rent compute instead of building it?
Building a data center takes years of construction, power hookups, and equipment orders, and AI chips have been in short supply. Renting lets a lab add capacity quickly without tying up capital in buildings. Renting also lets a lab change providers or sizes as its needs change. The largest cloud providers have long sold computing this way, with Amazon Web Services launching its rental service in 2006.
Why do shares fall after strong results?
Stock prices already include what investors expect to happen, so the reaction depends on how results compare with those expectations rather than on the results alone. A company priced for very fast growth can post large gains and still fall short of what buyers hoped for. Spending that rises faster than revenue can also weigh on the reaction. A 1968 study by accounting researchers Ray Ball and Philip Brown found that prices move on the unexpected part of an earnings announcement.
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